2008 (4) TMI 242 - HC - Income Tax

Writ petition is filed for the issue of writ of certiorarified mandamus to quash the order of the Settlement Commission and direct the Commission to take up the application filed by the petitioner u/s 245C(1) assessee failed to disclose full and true income in order to maintain an application u/s 245C & failed to pay admitted tax principle of acquiescence would apply order of Commission non-suiting the petitioner for admission of the case for settlement required no interference

Issues Involved:
1. Full and true disclosure of income by the petitioner.
2. Complexity of investigation.
3. Definition of 'case' under section 245A(b) for the assessment year 1990-91.
4. Maintenance of application under section 245C for the assessment year 1997-98.
5. Legal sustainability of the Settlement Commission's order.

Detailed Analysis:

1. Full and True Disclosure of Income by the Petitioner:
The Settlement Commission rejected the application under section 245D(1) on the grounds that the petitioner did not make "full and true" disclosure of his income. The petitioner claimed that his mother bequeathed Rs.12.5 lakhs for constructing a hospital and hotel building. However, the Commission found that the document, though claimed to be a will, was effectively a gift deed since the amount was paid during the testator's lifetime. Additionally, the petitioner did not file any gift tax return or provide evidence for the source of the funds. The Commission concluded that the petitioner failed to disclose full and true income, which is a mandatory requirement under section 245C.

2. Complexity of Investigation:
The Commission also rejected the application on the grounds that no complexity of investigation was involved. The petitioner argued that the Settlement Commission misconstrued the provision by treating the complexity of investigation as the sole criterion for admission under section 245D(1). However, the court found that the Commission's decision was based on the absence of full and true disclosure, which alone justified the rejection. The complexity of investigation was an invited finding, as the petitioner had argued about it before the Commission.

3. Definition of 'Case' Under Section 245A(b) for the Assessment Year 1990-91:
For the assessment year 1990-91, the Commission found that there was no 'case' within the meaning of section 245A(b) of the Act. Additionally, there was a shortfall of admitted tax payable amounting to Rs.2010/-, which the petitioner did not satisfactorily explain. The court noted that payment of admitted tax is mandatory for the admission of an appeal, citing CIT vs. Smt. G. A. Samantha Kamini.

4. Maintenance of Application Under Section 245C for the Assessment Year 1997-98:
For the assessment year 1997-98, the petitioner did not file a return in response to the notice under section 147, leading to an assessment under section 144. The court emphasized that filing a return is mandatory under section 245C(1), rendering the application for this year not maintainable.

5. Legal Sustainability of the Settlement Commission's Order:
The petitioner contended that the order of the Settlement Commission was vitiated by a "decisive error" and jurisdictional error, relying on the Supreme Court's decision in Reliance Airport Developers (P) Ltd. However, the court concluded that the application did not meet the requirements of section 245C(1) due to the lack of full and true disclosure. The court also dismissed the argument that the Commission's decision was solely based on the lack of complexity, as the primary issue was the non-disclosure of income. The court cited precedents (CIT v. Income Tax Settlement Commission, V. H. Shaik Mohammed Rowther v. Settlement Commission) to emphasize that full and true disclosure is a pre-condition for invoking the Commission's jurisdiction.

Conclusion:
The court dismissed the writ petition, upholding the Settlement Commission's order. The petitioner's application was not maintainable due to the failure to disclose full and true income, lack of complexity in the investigation, and non-compliance with mandatory requirements under section 245C for specific assessment years. The connected miscellaneous petition was also dismissed.

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